Platinum Asset Management has put its two closed ended funds under strategic review in a bid to reduce the share price discount to pre-tax NTA.
The firm’s two listed investment companies Platinum Asia (PAI) and Platinum Capital (PMC) are $372 million and $462 million in assets respectively.
In statements to the ASX for each of the funds, Platinum said: “Over the last couple of years, the board has observed a trend away from closed ended investment vehicles, particularly those that lack sufficient scale to generate the liquidity required to maintain share prices close to the underlying net tangible assets.
“Unfortunately, [the funds] have not been immune from the effects of this general market sentiment.”
The firm said it has already undertaken multiple initiatives on both PAI and PMC funds in a bid to create shareholder value but that these have been unsuccessful.
“The PAI board has sought to create shareholder value through various capital management initiatives, including the issue of bonus options in April 2023 and the operation of an on-market 10/12 limit share buyback, which the board has today extended for a further 12-month period. Despite these actions, PAI has continued to trade at a persistent share price discount for some time.”
In the case of PMC, a sunset clause is tested every five years and the next one is due on 31 July 2024 which has prompted the firm to consider its future promptly.
“The sunset clause states that if by that date, PMC’s share price is trading at an ‘average discount’ of greater than 15 per cent of PMC’s net asset value measured over the 12 calendar weeks preceding the assessment date, the board must call a general meeting of members within 90 days to vote on, among other things, all necessary resolutions to effect a voluntary winding up of PMC.”
Platinum said the funds’ strategic review will consider options to build scale, including whether it should be converted into an open-ended fund structure allowing investors to trade at or close to net asset value.
It expects to announce an outcome of the strategic review within the next four months.
Earlier this year, the firm’s chief executive, Jeff Peters, announced a two-part “growth and reset” turnaround strategy for the company.
A short-term phase over the next one to four months – reset phase – will include alignment of its expense base to current revenue conditions, review of product offering, renewal of client communication strategy, deep examination of its investment platform and review remuneration framework.
A second phase over the next six months – growth phase – will implement recommendations, build improved product and distribution capabilities through new channels, explore inorganic and organic growth opportunities for diversification, and complete back-office outsourcing projects.
FWIW I am a long term holder of both. I am relaxed about my LICs trading at a discount. Part of a cycle. I would likely exit if the discount was nullified though. Part of that is the SMSF reporting complications.